There are various ways in which one can buy or sell a house. For those who have initially availed of a loan for the purchase of a property but for some reason could not continue anymore with payments, there is an option available wherein the balance of the loan may be paid by another person.
This is called “pasalo”. Pasalo is a Filipino term which means to “have another to take one’s place”. In order for the “pasalo” of the properties to be acquired by the person who assumed the loan, there are processes that you must go through first. One of the institutions that offers “pasalo” is through the Pag-Ibig Housing Loan.
Get to know the ways in which you can acquire a property through this method beginning with payment options as well as the documentary requirements to be submitted to complete the process.
Common Ways to Acquire Property
One of the ways of paying the balance of the first buyer is through the application of a new Pag-Ibig loan. However, before application, the current buyer must ensure that the first buyer has paid for at least two years at Pag-Ibig to be able to avail of this method. After completion of the application of the Pag-ibig Housing Loan, the property will then be named after the current buyer.
Another way of completing payment of the assumed balance is by the current buyer coursing the payments to the first buyer. The first buyer will then be the one who shall pay to Pag-Ibig the assumed balance payments issued by the current buyer. While this arrangement is convenient, it is not without risk as the current buyer must trust that the payments will be forwarded and completed by the first buyer.
Note that the property shall not be transferred to the name of the current buyer until payments of the remaining balance have been satisfied. Until then, the property shall remain in the name of the first buyer.
Lastly, the other way that the current buyer can pay for the balance of the loan of the first buyer is through direct payment. This is done by having an arrangement between the first buyer and the current buyer on how the direct payment shall proceed. Current buyer shall proceed to the Pag-Ibig office to be able to access the Statement of Account of the first buyer, and subsequently request through a Special Power of Attorney for the change of information.
Documentary Requirements
Several documentary requirements must be submitted to Pag-Ibig for the completion of the transfer of the property from the first buyer to the current buyer besides the fulfillment of the payments. These are:
- Special Power of Attorney;
- Deed of Absolute Sale with Assumption of Mortgage, a certification to prove that payment has been made in full or the Acknowledgement Receipt, and;
- the Transfer of Rights with Assumption of Obligation.
Common Challenge in Pag-Ibig Pasalo
There are situations, however, in the Pasalo that buyer and sellers purposefully do not update the loan documents to transfer the loan from the seller to the buyer. This happens when the buyer has incomplete requirements or does not have a good credit score which allows him to successfully secure a loan under his name. In this situation, and if the seller is in a tight spot and requires immediate cash, the seller would agree to a quick sale by allowing the buyer to assume the loan under the name of the seller. Meaning, there is an internal agreement between the seller and the buyer that the loan shall continue to be under the name of the seller but it is the buyer that is funding the payment of the loan.
This situation is risky for both buyers and sellers. This is because the seller would have to rely on the buyer to constantly fund the bank account from which the loan amortization shall be debited from. On the other hand, this is risky to the buyer, because since the bank account would generally still be under the name of the seller, the seller can withdraw the funds and thereby the loan amortization will no longer be funded. There is also a situation where double sale may arise. This means that the seller may sell the property again to another buyer considering that the documents (including the loan) are all still under the name of the seller.
Need further information and assistance in Pag-Ibig Housing Loans? Talk to our team at FILEDOCSPHIL to know more about the requirements and process. Call us today at (+63) 917 149 2337 or send an email to info@filedocsphil.com for more information.